Yahoo Finance Google buys Fitbit in $2.1bn deal as internet giant pushes further into hardware market
Google has swooped to buy smartwatch maker Fitbit in a $2.1 billion deal as the internet giant pushes further into the hardware market.
Google has agreed to pay $7.35 a share for San Francisco-based Fitbit, whose eponymous device tracks activities and helps users monitor their health. It can track the distance a user walks, runs, swims or cycles.
The $7.35 price represents a 71% premium to Fitbit’s share price before reports emerged that Google had made a bid on the company on Monday. A termination fee if the deal falls through was set at $80 million.
Google has a growing range of physical products including smartphones and laptops, and provides a free wearable operating system called Wear OS for other companies to use, but has yet to build its own watch.
Buying Fitbit would give Google a new platform along with access to the company’s more than 27 million active users. Google could also combine the company with smartwatch technology it bought from Fossil Group earlier this year to help it design new products.
Fitbit has been struggling to compete with Apple and others in the smartwatch market. Its shares sunk to a low of $2.85 a share at the end of August. Today they jumped 16% in pre-market trading.
The deal is sure to attract regulatory scrutiny. US State and federal authorities are investigating Google for potential anti-competitive practices related to how it handles consumer data and operates in the digital-advertising market.
In the UK, Labour’s shadow digital, culture, media and sport secretary Tom Watson has already called for the deal to be halted until a wider inquiry into competition in the technology sector is completed.
Earlier this week said: “This is not just a business deal, it’s a data grab – and that should worry us all. Any such proposal must be subjected to the most rigorous possible scrutiny and must be fully investigated by the [Competition and Markets Authority].”
Though Google isn’t a leader in smartwatches or fitness trackers, regulators in the US and elsewhere will likely have questions about what Google intends to do with the data Fitbit users have shared over the years, including intimate health and location information.
The acquisition is Google’s second major purchase this year, after it agreed to pay $2.6 billion for cloud software provider Looker in June.
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